Klein's Fiscal Warnings at Odds With His Rosy View 11 Days Ago

Less than two weeks ago, CIRM Chairman Robert Klein told directors of the California stem cell agency that its financial situation was rosy and no problems existed with its bond financing, its only source of cash.

His statements on Dec. 3 stand in sharp contrast to his election eve warning today that the agency must act swiftly to stave off a looming funding problem.

Klein made his comments at a meeting of the directors Finance Subcommittee, chaired by Michael Goldberg. Only a handful of the 29 CIRM directors attended the meeting. Here is the text of what Klein said, according to the transcript.

“Chairman Goldberg: Okay. Thank you. I'd like to in the time that remains briefly address the climate for california bond issuance since we're going as an agency dependent on their bond authority. And there's been articles in the press in the last two weeks in connection with the last large series of bond financings the state has done about some of the challenges and difficulties. And without getting into any of the specifics of those issues, I'd like to ask Chairman Klein, who's maintained contact with the issuing authorities, what the general perspective or view is over the course of the next 12 to 24 months and whether or not there's any cause for action on the part of the ICOC (CIRM's board of directors) with respect to anything we can or should be doing being mindful of that.

“Chairman Klein: Thank you, Chairman Goldberg. So given that over the last three years we've tried to always look forward at least a couple of years and foreseeing the difficult environment particularly with some of the initiatives that passed in this last session, this last electoral cycle, we've been fortunate, by doing advanced planning, to make sure we could cover our strategic plan advances we would need to make over the running 24-month period going forward. At this point we've achieved that objective, and we have a little less than 24 months, but approximately that level of cash funding that's available to us. So our programs are very stable during this period. It's hopeful that in that time period California will return to a much stronger bond position.

"Nevertheless, for our scientific partners and our international partners and our individual scientists within the state, it's important to again remind everyone that under the state institution, the top 40 percent of the revenue of the state goes to education, and then bond debt service is the next priority ahead of harbors, ahead of major new highway construction, and other projects to the extent they come out of state funds versus federal funds. So California will retain the ability, even if this difficult period is a full two years or longer, to fund this agency on a timely basis. And institutions and the scientists will be covered in the time period of our commitment. So we're very thankful for the support of the state treasurer's office and for the support of the governor and the director of finance, for the work of (CIRM staffer) Lynn Harwell, who has been instrumental in executing on this plan, for (CIRM directors) Ted Love and Marcy Feit, who have been on the bond finance credit committee of the state with me. And we are thankful and very appreciative of the fact that we'll be able to honor our strategic plan and have the flexibility during that time to use reserves that are set up specifically to respond to new scientific developments that are certainly expected to arise at various times during that cycle.

“Chairman Goldberg: Thank you, Chairman Klein.”

Eve of the CIRM Election: Klein Invokes Sudden Financial Warning

CIRM Chairman Robert Klein today sounded an urgent, financial alarm in his bid to be re-elected to a new term at the $3 billion California stem cell agency.

In a “statement of candidacy” on the CIRM Web site, Klein indicated he was needed at the agency to handle a sudden, new quasi-crisis that requires action next month. And in an effort to make it easy for directors to choose him at their meeting tomorrow at Stanford University, he also reduced his proposed term to three to six months, down from 12 months. However, he did not renew his pledge not to take a salary, which could hit $529,000 annually.

Several items concerning Klein's candidacy were fresh in the statement. One was the financial warning from Klein, who portrays himself as something of an expert on government bond financing. He said that the agency needed to move swiftly on new issuance of new state bonds, CIRM's only source of financing.

At their meeting just last Wednesday, CIRM directors heard no mention of the problem, only a routine budget presentation with no indication that quick action was needed.

But in his message dated yesterday, Klein said it was “essential”for CIRM to quickly provide assurances of “reliability of our funding.” He wrote,

“The (state) Treasurer's office has just informed us that the next California Stem Cell Research and Cures Finance Committee meeting must be held in January 2011. Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein also said that “our collaborative funding partner nations” require early next year “assurances of our future performance.”

It is not the first time Klein has sprung a January financial surprise on directors. In January 2009, he unveiled a critical bond funding problem that directors also had not been informed about earlier.

(See here, here and here.)

Another new item in the candidacy statement was Klein's promise to only serve three to six months, although it is not clear that the board can elect a chairman for anything less than the six years specified by law. Previously Klein promised to serve only 12 months. Significantly, in the otherwise fairly detailed document, he did not renew his promise not to take a salary. Currently he receives $150,000 for halftime work and is entitled up to $529,000 annually

Klein, a Palo Alto real estate investment banker, additionally backed away from his position that he can only be replaced by a nationally known scientist. Instead, he said he would work with the board to develop criteria for selection of a new chair.

Klein also pledged to “change the communications paradigm,” which encompasses the agency's public relations efforts. He cited an example of a 3 million, “affinity group” email effort during the 2004 election campaign for Prop. 71 as something he would like to replicate. Klein said that CIRM's communications should be changed “from our highly refined scientific focus (with emerging, quality public components) to a broad and innovative program that will be meet our obligation to inform all Californians of the milestones of progress we have achieved.”

More Coverage of Call for Delay in CIRM Chairman Election

The San Francisco Business Times late yesterday carried a story on the “strong” recommendation by the state's top fiscal officer to cancel tomorrow's scheduled election of a new chairman of the California stem cell agency.

You can find the article by Ron Leuty here.

Klein's Collateral Damage: Delay Needed in CIRM Chair Election

Fans of the editorial pages of the leading newspaper in California's capital this morning read a piece denouncing the “shenanigans” of the chair of the state's $3 billion stem cell agency, Robert Klein, and urging him to step aside.

The op-ed article in The Sacramento Bee was written by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., a longtime observer of and participant in CIRM affairs. He said,

“As his six-year term comes to an end, Bob Klein should be high-fiving his way around a victory lap, basking in accolades for his substantial accomplishments as the first chair of the California Institute for Regenerative Medicine.

“Instead, unable to transcend a propensity to micromanage, he tried to pull strings behind the scene to anoint his successor. Inevitably the effort blew up in his face embarrassing him and his choice for the job, and causing collateral damage to the image of the agency’s governing board, the Independent Citizens Oversight Committee(ICOC).”

Simpson said that Klein's conduct and the election of a new chair are not minor matters to be shunted into a convenient closet at CIRM headquarters in San Francisco. He wrote,

“Indeed, how CIRM is governed and whether the board steps up and exercises appropriate oversight could spell the difference between CIRM’s successfully funding $3 billion in cutting edge research or becoming a boondoggle that is a monument to wasteful spending.”

Simpson continued,

“So what should the ICOC do to restore a modicum of reason to the succession process?

“Do not take Klein at his word. When Proposition 71 was passed he vowed to serve only a couple of years as chairman, without pay. Six years later, he is in the job, now officially defined as a half-time position, drawing $150,000 and re-nominated to a second term.

“There is no reason for the ICOC to act now; Wednesday’s vote should be canceled. All pending nominations should be withdrawn. If the board doesn’t elect a successor, Klein continues until a successor is selected. If he is elected to a second term, based on past history, he’ll likely be around in six years.

“The ICOC and its governance committee must have a serious public discussion about the sort of candidate required; it’s clear the constitutional officers would welcome the input. New nominations can be made and an election held by March.”

Simpson concluded,

“There are two eminently qualified candidates: Current vice chairs Art Torres and Duane Roth. Bob Klein needs to get out of the way so one of them can ultimately be elected.”

Simpson's article followed a letter to CIRM directors by the state's top fiscal officer calling for cancellation of tomorrow's election of a new CIRM chairman. Controller John Chiang, who heads a CIRM financial oversight committee, said the current process is fundamentally flawed.

CIRM Director Prieto Weighs in on Letter From Scientists

Another member of the governing board of the $3 billion California stem cell agency today questioned a letter from 11 leading stem cell scientists supporting the re-election of Robert Klein as chairman.

Francisco Prieto, a Sacramento physician, commented on remarks by David Serrano Sewell, a CIRM board member and San Francisco deputy city attorney, in the “11 Scientists” item earler today. Prieto also said that the chairman of the agency did not need to have substantial scientific experience as proposed by the 11 scientists.

Prieto said,

“I have to agree with David. This decision is a board responsibility, and our concern is what is best for the future of CIRM. These scientists have the right to weigh in as does any other citizen, but I question at least part of their premise: We may indeed need ' substantial scientific and medical experience,' but there is no particular reason that this expertise must be in the person of the chair. I would argue it more appropriately rests with a VP for R&D, a position we have been trying to fill for much too long now. Bob Klein has an impressive fund of scientific and medical knowledge, but it is largely self-taught, and we may decide that our ongoing division of responsibilities at CIRM should change as the agency matures and evolves.”

Top California Official Urges Suspension of CIRM Chair Election

The state's top fiscal officer, who has a special role in connection with the California stem cell agency, this afternoon called for cancellation of this week's election of a new CIRM chair, declaring that the current process is fundamentally flawed.

John Chiang, who heads a Prop. 71-created committee that reviews the financial practices and performances of CIRM, said in letter to the agency's governing board,

“It is clear that the current selection process is fundamentally flawed. The taxpayers who provide the funds for CIRM must be assured that the chair and vice chair are selected in an open, transparent process – not through a backroom deal or by default because a deal has fallen apart.”

CIRM directors are scheduled to meet on Wednesday to consider the choice for a chairman to replace Robert Klein, a Palo Alto real estate investment banker, whose term is expiring. The only other candidate besides Klein is Art Torres, one of two vice chairs at CIRM. However, Torres withdrew from the running last week, clearing the way for Klein to continue to serve.

Chiang's letter referred to the ruckus over Klein's attempt to hand pick his own successor. The move failed following reports of closed-door meetings and conflicts of interest. The flap attracted attention in the international stem cell community, attention that CIRM did not welcome.

Chiang, a Democrat, said he was strongly recommending that the CIRM board suspend the selection of the chair and vice chair and ask that the nominations be withdrawn. Chiang said,

“The first step in a new process should be for the (directors')Governance Subcommittee to have a full, public discussion of the necessary criteria for a new Chair. The first question the Board should examine is the role of the Chair of the ICOC and how it differs from the role of the President. While I understand that Proposition 71 provides for a unique, co-leadership model, it is critical from a good governance perspective that there is a clear delineation of duties and decision-making.

“What makes a governing board effective is long-term transparency and accountability. The ICOC's most important role - to provide independent oversight of CIRM management - is compromised when the ICOC chairman is essentially serving as the CIRM CEO.

“It also is important to keep in mind that the Chair is but one member of the ICOC Governing Board. Good governance must rely on the actions of the whole Board, not a single member. While the current structure may have been necessary as CIRM was in start-up mode, as the Institute moves into the next phase, it is important from a good governance perspective that it be driven by a fully participating oversight board rather than a single individual, regardless of how talented that individual may be.

“The ICOC has a responsibility to the taxpayers of California to conduct its business in an open and transparent manner. The most effective way the ICOC can assure the public that the Chair and Vice Chair selection process was fair and resulted in the best candidates is to restart the process in a transparent manner.”

The committee that Chiang heads is the only state entity that is charged legally with regularly examining the operations at CIRM.
State Controller Calls for Suspension of Stem Cell Agency Election

Bad Link to Letter Fixed

In the "11 Top Scientists" item today, we had a bad link to the letter that they wrote. The link is now fixed. If you want to go straight to the letter, here is the link.

Eleven Top Stem Cell Researchers Back Klein for Re-election

A who's who of California – if not global – stem cell science is lobbying directors of the state's $3 billion stem cell agency to go along with Robert Klein as its chairman despite the disclosure of his now failed, closed-door efforts to hand pick his successor.

The letter may not necessarily have its desired impact. One CIRM board member, David Serrano Sewell, said,

"Honestly, I'm not sure anyone really cares what they think, they should focus on research and finding cures, not dwelling on board matters."

The 11 signatories to the letter include two Nobel Prize winners, one of whom, David Baltimore, is a former member of the governing board of CIRM. All but one of them have tens of millions of dollars at stake in grants from the stem cell agency and are heavily invested in basic research, as opposed to translational efforts to push research into the clinic.

Irv Weissman of Stanford, one of the signers, for example, has $23 million in grants from CIRM. Another, Larry Goldstein of UC San Diego, holds $14 million in grants. Most of the institutions employing the scientists also have representatives on the CIRM board of directors. (For additional information on Goldstein's grant, see here.)

CIRM is currently involved in assessing the future direction of its research. Should it move more strongly towards business and actual use of stem cell therapies on patients, it is likely to mean that basic research will have a smaller share of CIRM's remaining $2 billion.

In the letter, the 11 said,

“In this regard, we stress, that our collective experience with the discovery of new approaches to the treatment of disease is that new solutions to currently intractable problems will come primarily from research that gives rise to new understanding of disease itself. On occasion, significant progress can also come from thoughtful application of existing knowledge, but either on its own is insufficient. Hence, it is crucial for the next ICOC Chair to have a deep understanding of both scientific and medical principles in order to balance short and long-term investment in stem cell research and clinical application.”

The group plumped for the proposal by Klein, a real estate investment banker, that he be replaced with a nationally known scientist. They said,

“We also enthusiastically support Mr. Kleinʼs proposal to find a successor who has substantial scientific and medical experience as well as personal familiarity with the burdens of disease.”

That requirement is not part of the legal qualifications for chair, which do include a familiarity with bond financing, which is the only source of CIRM funding.

The board meets Wednesday afternoon at Stanford to consider action on nominations for its chair. It does not actually have to vote, however. If it does not do so, Klein, whose term is expiring, would automatically continue in office.

One of our readers refreshed us on that last week after we wrote that Klein appears to be a shoo-in for re-election after the only other nominee, vice chairman Art Torres, said he was stepping aside for the good of the agency. Klein has offered to serve for 12 months without salary until the board picks a new chair. His decision to decline a salary (he now earns $150,000 for half-time work) apparently removes a conflict of interest and enables him to participate in board discussions about chair selection that he would be otherwise barred from. However, removal of his salary would require board action, which would seem to be an ongoing conflict for him, whether he wants the salary or not.

There is a remote possibility that another candidate for chair could surface. The state treasurer has not yet made a nomination. The state controller nominated Torres but could withdraw that nomination in favor of someone else. The governor and lieutenant governor have nominated Klein. The board's choice is limited by Prop. 71 to those nominated by the four state officials, but it does not have to accept any.

Torres Withdraws from Contest for CIRM Chair , Klein Now a Shoo-In

Robert Klein today appeared certain to be re-elected as chairman of the $3 billion California stem cell agency after the only opposing candidate, vice chairman Art Torres, dropped out of the race.

Torres disclosed his withdrawal in a statement posted quietly yesterday on the agenda for next week's board meeting, which is scheduled to consider election of a chair. Torres basically said that he is dropping out for the good of the agency. He declared,

“I believe that the board needs more time to process the qualities it needs in a chair as we move forward to the next crucial phase. We also need to recognize the hard work and accomplishments of this board, as validated by the positive review of the External Advisory Panel’s report. We cannot let our collective success be overshadowed by a leadership debate.

“I initially stepped aside when Dr. Alan Bernstein’s candidacy became apparent. The mission and funding the best science have always been my priority. We owe nothing less to patients and the taxpayers of California.”

Torres continued,

“I am taking Bob Klein at his word that he will serve only for a limited transition period. That will give time for our Governance Subcommittee, under the leadership of Sherry Lansing, to determine the qualities we need in our next chair and to report its assessment to the full board for further discussions and deliberations.”

Torres, a former veteran state legislator, also remarked on the flap in the media about Klein's attempt to engineer the selection of his successor. One longtime observer and participant in CIRM affairs, John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., earlier described the Klein's efforts as “sleazy and inappropriate backroom tactics.”  Klein's actions drew international, unfavorable attention on the Internet and even generated an article in the Toronto Globe and Mail concerning what turned out to be Klein's specious claim that the chairman had to be a citizen of the United States.

Asked for a comment on the latest development, Simpson said,

“The entire 'succession' saga is a debacle that reflects poorly on the ICOC (the agency's governing board), but especially on Bob Klein, who tried to create new criteria for the chair's position not specified in Proposition 71, which he apparently cites when it is convenient and flagrantly flouts when it is not. He wanted to hand pick his own successor, but that effort blew up in his face.

“Art Torres is eminently qualified to serve as chair and I am sorry to see him withdraw. Klein is the one who should stand down.”

In his statement to board directors, Torres said,

“As I'm sure is true for many of you, I am saddened by the recent press and blog stories that have compromised our collective hard work, history and mission. Further, these stories embolden our opponents who seek to stop stem cell research on the federal and state level. We must stand together to confront the challenges that lie ahead.”

Technically another challenger to Klein could arise but that is highly unlikely given Torres' statement, which undoubtedly reflects board sentiments as expressed during closed door board meetings last Wednesday.

Torres' reference to future actions by the Governance Subcommittee concerning selection of a new chair could mean that Klein's attempt to lead the process will be shunted aside. Earlier, Klein, a real estate investment banker, indicated that he thought it was necessary to find a nationally respected scientist to replace him. He said he would engage in a major search to find such a candidate. The board, however, has never said that it thought a scientist was necessary to fill the post.

Simpson said today,

“CIRM does not need a $500,000-a year scientist to serve as chairman when it already as a $500,000-a-year president. If this attempt was prompted by the belief the president is not performing adequately as CIRM's chief executive, the solution is simple. You fire the president and hire a new one. You do not spend another $500,000 of taxpayers' money to create a new position of "executive chairman."

Klein has said he will not serve for more than 12 months. He also recently said he would forego his $150,000, halftime salary, a move that allowed him to take part in the closed-door discussions involving selection of a chair. The action removed an economic conflict of interest on his part.

The Odd Business of Electing a New CIRM Chair, Plus Klein Says No to Salary

CIRM Chairman Robert Klein will not accept a salary if he is re-elected as chair of the $3 billion California stem cell agency.

Klein's new position was disclosed today by James Harrison, outside counsel to the CIRM board, as part of  a response to queries dealing with executive sessions and election of a new chairman. Previously Klein said he would continue with a half-time, $150,000 salary. The top of chair's salary range hits $529,100 annually.

Klein's decision to not take a salary could allow him to take part in board discussions about a new chair that he would otherwise be excluded from on the basis that he has a conflict of interest involving a possible salary from CIRM

We posed several questions to Harrison in the wake of yesterday's two executive sessions by the CIRM board at its meeting in Irvine. However, before we go into Harrison's response, let's first look at some of the conditions that the CIRM board must deal with in electing a chair, all of which are dictated by Prop. 71, a measure written by Klein, Harrison and a handful of others. The measure also contains terms that make it nearly impossible to change even when it is obviously necessary to do so.

The 29-member CIRM board faces an odd situation. It cannot simply vote one of its members into the office of chair, as most boards might do. Under the terms of Prop. 71, four state officials nominate candidates for the job, if the officials so desire. No penalty is provided if they fail to do so. The board chooses between the four, if it so desires. If it does not, the existing chair continues in place, if he so desires. Or he could walk out the door. Or the board could make it clear that it wants the sitting chair to depart, either informally or by taking a vote of no confidence. In such a situation, presumably the statutory vice-chair, Art Torres, would assume responsibilities until the board approves a new chair.

The board has no deadline for action, other than what it self imposes. If it fails to elect a new chairman by Jan. 3, the new governor and the new lieutenant governor could withdraw the old nominations for Klein, which would take him out of the running. That would leave Torres as the only candidate, assuming that the new governor and lieutenant governor do not offer nominees of their own. Other permutations exist, but I hope readers understand that the process is – how should I say it – goofy?

The Little Hoover Commission, the state's good government agency, last year noted that the process is less than salubrious and recommended changes. However, those proposals have yet to gain much traction.

On top of all this are the state's open meeting laws. They are well-intentioned and serve to protect the public against backroom dealings, but they do make it difficult to make decisions on such sensitive and personal matters as selecting a chairman. Especially for such an ungainly and large board as CIRM's, some of whose members do not know each other well. Ordinarily, in a non-government situation, board members could chat informally and work out a choice. But not at CIRM. For example, its directors must exercise great care so that they do not inadvertently engage in a serial meeting. According to the state attorney general, a serial meeting is “a series of communications, each of which involves less than a quorum of the legislative body, but which taken as a whole involves a majority of the body’s members.” Serial meetings can even occur when surrogates (aides, staffers, etc.) are used to carry messages between board members. It almost means that a board member who wants to talk to another director about a matter must consult an attorney to be sure no law is violated by having the conversation. (Here is more on serial meetings.)

CIRM's board clearly skirted the edge of the ban on serial meetings in connection with Klein's recent unsuccessful efforts to engineer the selection of his successor. But to determine whether the edge was crossed would require an examination of all the email and phone records (home and office) of all the board members for a specific period.

But back to Harrison and his responses to the queries involving yesterday's executive sessions, here are the questions we asked Harrison. His verbatim response follows.

“Did the subject of selection of a new chairman come up during today's executive sessions? If so, please lay out the legal justification for private hearings on what is clearly intended to be a public process.

“Were Klein and Torres present for all or part of the executive sessions? Was Klein present during a presentation by Torres? Was Torres present during a presentation by Klein? On what basis were they excluded? Election of public officials usually takes place in public forums which can be attended by the candidates.

“Did the candidates make presentations to the board on behalf of their own candidacies or answer questions from directors concerning their views on CIRM and the chairmanship? 

“Besides today, has the subject of the selection of a new chairman come up in other executive sessions?”

Harrison's response:

“Prop. 71 permits the Board to convene in closed session to consider matters concerning the appointment and employment of CIRM officers and employees. (Health & Saf. Code, sec. 125290.40(d)(3)(D).) As you know,in addition to being officers of CIRM's Governing Board, the Chair and Vice Chair are also defined as "employees." Consistent with the practice it employed for the selection of Vice Chair in 2009 and the procedure adopted by the Board in August 2010, the Board met in closed session to discuss nominees for Chair and Vice Chair. The Board did not, however, take any action. Also consistent with past practice and the procedure adopted by the Board in August, there will be an opportunity for public presentations by the nominees, and the Board will take action in a public session.

“Art and Bob appeared separately before the Board to answer questions regarding their respective candidacies for Chair. To avoid any potential for a conflict of interest, neither was present while the other answered questions regarding his candidacy for Chair.

“The subject of nominees for Chair has not come up in a prior closed session.

“Bob Klein asked me to let you know that he will not accept a salary to underscore that, if elected, he only intends to serve during a transition period.”

More Than You Want to Know About Serial Meetings

Here is what the state Department of Justice has to say about serial meetings involving public agencies in California. The act referred to is the Bagley-Keene Open Meeting Act

“The Act expressly prohibits the use of direct communication, personal intermediaries, or technological devices that are employed by a majority of the members of the state body to develop a collective concurrence as to action to be taken on an item by the members of the state body outside of an open meeting. (§ 11122.5(b).)

“Typically, a serial meeting is a series of communications, each of which involves less than a quorum of the legislative body, but which taken as a whole involves a majority of the body’s members. For example, a chain of communications involving contact from member A to member B who then communicates with member C would constitute a serial meeting in the case of a five-person body. Similarly, when a person acts as the hub of a wheel (member A) and communicates individually with the various spokes (members B and C), a serial meeting has occurred. In addition, a serial meeting occurs when intermediaries for board members have a meeting to discuss issues. For example, when a representative of member A meets with representatives of members B and C to discuss an agenda item, the members have conducted a serial meeting through their representatives acting as intermediaries.
242 Ops.Cal.Atty.Gen. 61 (1963); see also 32 Ops.Cal.Atty.Gen. 240 (1958).

“In the Stockton Newspapers case, the court concluded that a series of individual telephone calls between the agency attorney and the members of the body constituted a meeting.3 In that case, the attorney individually polled the members of the body for their approval on a real estate transaction. The court concluded that even though the meeting was conducted in a serial fashion, it nevertheless was a meeting for the purposes of the Act.

“An executive officer may receive spontaneous input from board members on the agenda or on any other topic. But problems arise if there are systematic communications through which a quorum of the body acquires information or engages in debate, discussion, lobbying, or any other aspect of the deliberative process, either among themselves or between board members and the staff. Although there are no cases directly on point, if an executive officer receives the same question on substantive matters addressed in an upcoming agenda from a quorum of the body, this office recommends that a memorandum addressing these issues be provided to the body and the public so they will receive the same information.

“This office has opined that under the Brown Act (the counterpart to the Bagley-Keene Act which is applicable to local government bodies) that a majority of the board members of a local public agency may not e-mail each other to discuss current topics related to the body’s jurisdiction even if the e-mails are also sent to the secretary and chairperson of the agency, posted on the agency’s Internet website, and made available in printed form at the next public meeting of the board.4

“The prohibition applies only to communications employed by a quorum to develop a collective concurrence concerning action to be taken by the body. Conversations that advance or clarify a member’s understanding of an issue, or facilitate an agreement or compromise among members, or advance the ultimate resolution of an issue, are all examples of communications that contribute to the development of a concurrence as to action to be taken by the body.

“Accordingly, with respect to items that have been placed on an agenda or that are likely to be placed upon an agenda, members of state bodies should avoid serial communications of a substantive nature that involve a quorum of the body. In conclusion, serial meeting issues will arise most commonly in connection with rotating staff briefings, telephone calls or e-mail communications among a quorum of board members. In these situations, part of the deliberative process by which information is received and processed, mulled over and discussed, is occurring without participation of the public. Just remember, serial-meeting provisions basically mean that what the body can not do as a group it can not do through serial communications by a quorum of its members.”

No Real Problem with Canadians as CIRM Chair

A California attorney general's opinion rendered decades ago makes it abundantly clear there was no real legal barrier to a Canadian citizen serving as chairman of the state's $3 billion stem cell agency.

CIRM Chairman Robert Klein announced last week that the candidacy of Alan Bernstein, head of HIV Global Vaccine Enterprise of New York, had to be dropped because of what Klein described as a citizenship problem. Klein's announcement came after a public ruckus erupted over his attempts to maneuver Bernstein into the chair's post.

Klein referred to a California government code section that says a person cannot hold “civil office” in California without being a citizen of the state.

However, the 1978 opinion from the attorney general said,

“This section by its requirement of citizenship for the holding of a civil office is unconstitutional in that it is not narrowly and precisely drawn so as to apply only to offices whose incumbents participate directly in the formulation, execution or review of broad public policies having a substantial impact upon the public. 61 Op.Atty.Gen. 528, 12-6-78.”

In California, such attorney general opinions are the litmus test for actions by state agencies, having the force of law for all practical purposes. The attorney general's Web site says,

“The formal legal opinions of the Attorney General have been accorded 'great respect' and 'great weight' by the courts.

As reported in a previous item, Web CIRM's outside counsel, James Harrison, told us,

“We discovered the citizenship issue when Bernstein's name was mentioned as a candidate. Given the litigation CIRM has faced over the years, there was a need to be cautious and there was not sufficient time to obtain closure on this issue before the deadline for nominations. You should know that there is an AG opinion from 1978 declaring that the citizenship requirement is unconstitutional.”

Earlier we raised the question of whether the law in question would apply to CIRM President Alan Trounson, who is an Australian, and who was hired three years ago. Our reading is that it would. However, that is moot given the attorney general's opinion.

CIRM Board Meeting Back Online

The Internet audiocast of the CIRM board has resumed with discussion of changes in the biotech loan program.

CIRM Directors Resume Public Meeting

Directors of the California stem cell agency reconvened in public after a lengthy closed-door session during which they were believed to be discussing the election of a person to replace Robert Klein as chairman of the $3 billion enterprise. 

The Internet audiocast of the event was up briefly but has now vanished. 

Trounson on Recommendations of Blue-ribbon Reviewers

CIRM President Alan Trounson was generally pleased today with the report and recommendations of a  blue-ribbon panel that reviewed the $3 billion stem agency's effort.

He made a presentation to the board at its meeting today in Irvine that was a bit truncated in the Internet audiocast. However, you can find a summary of his remarks (Power Point style) here. The bulleted points are his response.

Trounson was principally responsible for the selection of the members of the panel and orchestrated the three-day October review, which was conducted almost entirely behind closed doors.

CIRM Press Release on External Review Report

The California stem cell agency today posted a press release on the report and recommendations  by a blue-ribbon review panel that were discussed today at an Irvine meeting of its board of directors. The release contains quotes from both reviewers and board members. You can find it here.

Stem Cell Agency Board Still in Closed Session

Directors of the $3 billion California stem cell agency are still meeting in closed session following a statement by its Chairman Robert Klein defending his actions in connection with an attempt to hand pick his successor.

The board went to lunch and into an executive session about two hours ago shortly after Klein orally laid out his view of what transpired in connection with the nomination of Alan Bernstein to succeed Klein. Klein did not ask for questions from the board.

We have queried the board's outside attorney, James Harrison of Remcho Johansen and Purcell of San Leandro, Ca., whether the subject of the election of a new chair is part of the executive session discussions.

Prop. 71 does not specifically provide for closed door meetings in the selection of a chair.  About the election process, it simply says,

"A chairperson and vice chairperson who shall be elected by the ICOC members. Within 40 days of the effective date of this act, each constitutional officer shall nominate a candidate for chairperson and another candidate for vice chairperson."

However, the chair and vice chair are CIRM employees by law and are entitled to salaries. Personnel matters may be considered in executive session, under state law. Most actions involving votes of the full board must occur in public.

Klein Addresses CIRM Board on His Succession Moves

Robert Klein, chairman of the California stem cell agency, today commented orally and briefly on his efforts to hand pick his successor at the $3 billion enterprise.

His remarks were a shorter and slightly altered version of the material he posted this morning on the agenda for today's CIRM directors meeting in Irvine.  Klein made one important addition to the posted material. He indicated that the board could not legally have a search committee that would make recommendations to the four state officials who make nominations. Prop. 71, the measure that created CIRM, stipulates that the board may choose from the nominees, although it could also reject them and request new ones.

Klein's surprise statement was the most forthcoming he has been on his unsuccessful effort to engineer the selection of Alan Bernstein as his successor. Bernstein is head of HIV Global Vaccine Enterprises of New York and chair of a panel that reviewed CIRM operations. News reports spoke of closed-door meetings and conflicts of interests involving Klein's attempt and rankled some CIRM board members.

Klein's comments this morning came just before the board's lunch break and a brief invitation from a UC Irvine stem cell researcher, Peter Donovan, to the board to tour the UCI stem cell facility, which CIRM helped finance. Klein did not entertain questions from CIRM directors.

Klein Defends Role in Selection of Successor

CIRM Chairman Robert Klein today posted a statement on the CIRM Web site regarding his attempt to engineer selection of his successor at the $3 billion stem cell agency. Klein's remarks were filed on the agenda for today's meeting of the CIRM board. It was not immediately clear whether he read the statement to the full board because the audiocast of the meeting began late and was interrupted from time to time.

Here is an excerpt:

"I organized a dinner among all of the individuals whose names were under consideration for nomination. I asked for Board counsel to be present to be sure that Bagley-Keene (open meeting law) requirements were observed. The intent was to provide a free exchange of ideas between the candidates and an opportunity for them to get to know one another. Indeed, I intentionally invited an individual whom I knew had a significantly different position than mine, in order to provide him an opportunity to present his views. The mutual respect and understanding of the candidates’ positions is generally considered essential to prepare for a thoughtful Board discussion on similarities, differences and strategic advantages of one possible candidate versus another. It was also intended to lay a foundation for constructive cooperation between those who succeeded and those who did not succeed in the election.

"Ultimately, lacking time to resolve a technical legal issue, the Governor nominated me, but I have made it clear that I only intend to serve until a new Chair can be selected. In my view, the best candidate would be a person who has exceptional scientific and/or clinical expertise and outstanding patient advocacy credentials that testify to his or her ability to assist in reaching the ultimate objective of our principal mission of driving therapies safely and quickly through FDA-approved clinical trials to patients. Certainly, I would include in our primary mission the parallel development of basic science to validate our understanding of chronic disease and the “mechanisms of action” of potential therapies; as therapies proceed through clinical trials, there will be innumerable intellectual challenges to overcome, ranging from basic science through early translational development issues through to clinical trial methodologies. The ideal candidate would have the education and experience to understand this entire continuum of biomedical knowledge.

"I had scheduled a Governance Subcommittee meeting to discuss the value of a scientist-clinician as Chair, but given that Dr. Bernstein was no longer a candidate, that issue was
moot.

"I look forward to a future, robust discussion at the Governance Subcommittee and at the Board of the best criteria for a new Chair."

(Editor's note: Klein later presented a briefer and slightly altered version of the statement orally to the board.)

CIRM Directors Probe New Directions for Stem Cell Agency

Directors of the California stem cell agency have just finished hearing the formal presentation of the report from the blue-ribbon review panel that recommended a strong push towards developing therapies and engaging the biotech industry, which has complained about its treatment by CIRM.

The directors took a short break and are scheduled to reconvene shortly. Some members of the public are expected to present statements.

CIRM directors this morning questioned the panel about engaging industry, improving communications  and proposals by the panel to reach out to find research any place in the world that could lead to therapies. Board members indicated that sort of "proactive" effort could be difficult given that CIRM funding is restricted to California. Review panelists said various kinds of collaborative efforts could be used without running afoul of the funding restrictions.

On relations with the biotechindustry, Alan Bernstein, head of HIV Global Vaccine Enterprise of New York and chairman of the review panel, said the group had "heard a lot of things from industry about things not working." He said,

"CIRM's management has to start talking with industry in a meaningful two-way dialogue."

CIRM Director Leeza Gibbons, a Hollywood entertainment figure and patient advocate, had a suggestion on improving recognition of CIRM among the California public. "We all want and need heroes," she said. Creating emotional connections is the way to win the hearts of the people, she said.

During its three-day review in October, members of the panel had wondered why the stem cell agency attracted so little attention in the mainstream media in California, a problem that relates as much, if not more,  to the nature of the state of the media as it does to CIRM.

Bernstein said greater use of patient advocates was important in communicating with the public, a suggestion that dovetailed into Gibbons' comment.

The panel reiterated its recommendation that the board should focus on strategic matters and clarify the conflicting roles of chairman and president, a longstanding problem created by the language of Prop. 71. 

Scientist George Daley of Harvard, one of the review panel members, said, "CIRM is in unique position" in the world "...because it has a bully pulpit, because it has tremendous influence."
He suggested that CIRM might want to assemble a "rapid strike force" to review outstanding research opportunities in the world to figure out how California can play a role.

Upcoming

We will be bringing you live coverage of today's meeting of the governing board of the California stem cell agency at UC Irvine. We are monitoring the session via the Internet from El Salvador with a cellular connection from a sailboat in the Estero de Jaltepeque. Stories will be filed as warranted. The meeting is scheduled to get underway at 9:30 a.m. PST, but usually begins shortly after the scheduled start-up time. If you would like to listen to the Internet audiocast, directions can be found on the meeting agenda.

The Canadian Citizenship Question – Day Four, an Answer!

The requirement that the chairman of the California stem cell agency be a citizen of California is unconstitutional according to a 1978 opinion by the state attorney general.

That's what James Harrison, outside counsel for CIRM, told the California Stem Cell Report early today. He was responding to an email query yesterday concerning the reason that Alan Bernstein, a Canadian, was scrubbed as CIRM Chairman Robert Klein's favorite candidate to succeed him in the position. Official opinions of the attorney general are widely regarded to have the force of law. The way the attorney general's Web site puts it is,

“The formal legal opinions of the Attorney General have been accorded 'great respect' and 'great weight' by the courts."

Here is what Harrison had to say,

“We discovered the citizenship issue when Bernstein's name was mentioned as a candidate. Given the litigation CIRM has faced over the years, there was a need to be cautious and there was not sufficient time to obtain closure on this issue before the deadline for nominations. You should know that there is an AG opinion from 1978 declaring that the citizenship requirement is unconstitutional.”

As far as we can tell the first public mention of Bernstein's name as a candidate came on Nov. 29 on the California Stem Cell Report. However, his name was being bandied about privately well before that. Late on Dec. 2, Klein released a statement that Bernstein was no longer being considered because of “a technical legal requirement regarding citizenship.”

Klein's statement followed stories in the media (see here, here and here) involving closed-door meetings and concerns about conflicts of interest in connection with his attempts to engineer selection of his successor. The ostensible citizenship condition also led to a well-read story in the Toronto Globe and Mail in which scientists in Canada deplored the requirement.

Harrison's response today about the matter came four days after we asked CIRM's official spokesman to provide the exact legal language concerning what Klein said was a citizenship problem.

We still have questions about whether the citizenship question applies to CIRM President Alan Trounson, an Australian, as well as the actual date when CIRM officials became aware there might be an issue with Bernstein.

Our assessment of the situation? Klein's statement was specious, at best. At worst, it might be called something else. It appears to be a dubious effort to paper over what is serious leadership issue involving Klein and raises significant questions about his credibility.

The Canadian Citizenship Question: Day Three

What exactly in California law bars non-citizens from becoming the chair of the $3 billion stem cell agency? Especially since its president is an Australian.

We asked Don Gibbons, CIRM's chief communications officer, about the issue last Friday morning. So far we have not heard back from him despite two additional queries. This morning we tried James Harrison, outside counsel to the board.

Our question to him was more specific and related to a provision that we found in state law (government code section 1020) that says,

“A person is incapable of holding a civil office if at the time of his election or appointment he is not 18 years of age and a citizen of the state.”

So we asked Harrison about that in addition to an opinion by the state attorney general's office concerning application of the section in the case of an appointment of a person to fill an unexpired district attorney's term. That instance involved an elective office. So far we have not found an opinion concerning application of the code to a non-elective position, such as president of the stem cell agency.

Of course, the key is how “civil office” is defined. The government code contained no definition. We searched other sections of California law as well but turned up no definition. However, opinions by the attorney general that related to “civil office” that we uncovered dealt with popularly elected officials.

Another little twist is whether the chair is “elected.” The directors vote on the position, but he is not elected by a vote of citizens.

So what does this all mean? When did CIRM Chairman Robert Klein and Harrison know there was a difficulty? Why was it not disclosed until after the ruckus erupted about Klein's attempt to install a Canadian as his successor?

Perhaps all will be revealed on Day Four of the “Canadian Citizenship Question.”

Read This Item to See What CIRM Has Expunged From Its Web Site

With one day left before Wednesday's meeting of the directors of the California stem cell agency, the public can find much to mull over by reviewing the agenda for the session.

But no one will find anything on three matters that have been expunged from CIRM's Web site. They deal with the less than artful attempt by CIRM Chairman Robert Klein to engineer the selection of his successor.

The items were removed after Alan Bernstein was scrubbed as a candidate following reports of conflicts of interest, inappropriate closed-door meetings and a late-coming disclosure that his Canadian citizenship reportedly disqualified him.

Here are the items that were stripped from CIRM's official agendas for both last Wednesday's meeting of the Governance Subcommittee and the full board session this Wednesday.

“Consideration of budget allocations and structural priorities.

“Consideration of future assignments to and volunteer support by Chair Emeritus.

“Consideration of authorization to compensate Patient Advocate Vice-Chairs of Grants Working Group in excess of cap if service as GWG Vice-Chair and Vice-Chair of any other Working Group requires commitment of more than 26 days per year.”

On the Governnance Subcommittee agenda today you will find only one word – “CANCELED” – in the place of these proposals. No mention is also made on the agenda for Wednesday's full board meeting that the document has been significantly altered and matters removed with no explanation.

Last week, we reported that CIRM had left the public and industry in the dark when it failed to provide any additional information beyond the cryptic listings of the three items, which appeared to involve fairly significant matters.

The board's outside counsel, James Harrison of Remcho Johansen and Purcell of San Leandro, Ca., Harrison, responded at the time, defending its information practices and also indirectly shedding some light on Klein's scheme to select his own successor. Harrison said in an email on Wednesday,

“In the case of the Governance Subcommittee, there are no written materials for two of the items because they are placeholders which will not be addressed at the meeting (because Bagley-Keene requires CIRM to post the agenda ten days in advance of a meeting, we sometimes include items before we know whether consideration of the items will be required in order to preserve the opportunity to consider them).  As to the one item which will be considered (the role of the former chair), the discussion is intended to be conceptual.  If the Subcommittee decides to move forward on this item, written materials will be prepared and distributed well in advance of the Board meeting at which it is considered.”

Our response? From the very first, CIRM should have said on the agenda that the items were placeholders involving selection of a new chairman or involved a conceptual discussion and why. To do otherwise is to withhold from the public important information that the State Constitution says it has a right to see. The upshot is that interested parties are left to ferret out or speculate on reasons behind the proposals, which, quite frankly, is not in CIRM's best interests.

CIRM also compounded the error by expunging the items entirely. It is not the first time that material on CIRM's Web site has been altered without providing any indication to readers that it has been changed. The information that CIRM presents on its Web site constitutes an official government document. When changes are made, there should be a trail that shows the changes. In this case, the items should have been left on both both agendas with a note that the meeting was cancelled or the matters would not be taken up. In essence, stakeholders and interested parties now have to save all versions of CIRM Web documents in order to detect whether changes are being made, significant or otherwise.

As for the items currently listed by CIRM to be considered by its directors on Wednesday, they include the report of the external review panel(see here and here), changes in IP policy, current budget figures and changes in its biotech loan programs.

The Irvine meeting will be audiocast on the Internet. Directions for tuning in can be found on the agenda.

Canadians No, Australians Yes?

You could call it “The Canadian Citizenship Question.”

Robert Klein, the chairman of the $3 billion California stem cell agency, brought up the subject last week when he used it to explain why his hand-picked successor, a man from Canada, could not be voted on by CIRM directors. Canadians cannot chair the agency, Klein said last Thursday, because of “a technical legal requirement regarding citizenship.”

However, non-citizens can serve as president of the agency – the case in point being Alan Trounson, an Australian.

We wanted to know more about this situation. So we asked Don Gibbons, CIRM's communications chief, early Friday about the exact wording of the law. We renewed our query late that afternoon and again this morning. So far the agency has not responded.

During the weekend, however, we dug into the State Constitution and the law dealing with state personnel. Our quick look turned up nothing that would bar a Canadian from the chairmanship, but we could have easily missed something.

We will bring you exactly what CIRM has to say about all this when we receive a response.

Is Klein a Shoo-In for Chair of California Stem Cell? Maybe, Maybe Not

Is the re-election of Robert Klein as chairman of the California stem cell agency a foregone conclusion? A significant number of our readers think so.

The only other candidate to be nominated for that post is Art Torres, now co-vice chair of the $3 billion enterprise. Nature magazine has reported that he probably is not going to push his candidacy.

However, if the CIRM governing board re-elects Klein, it will be indicating to the public and the international stem cell community that it tolerates, if not approves of Klein's maladroit attempts to engineer the selection of his successor. As was pointed out in a Toronto newspaper on Saturday, Klein's machinations compromised the reputation of California's stem cell effort.

The belief that Klein is bound to be re-elected seems to be based on several assumptions. One is that if Torres is elected, CIRM President Alan Trounson will resign. Nature magazine reported last week that Torres and Trounson “cannot stand each other.”

That would leave the agency with a new chair and with no president and no vice president of research and development, a new position that replaces the post of chief scientific officer. Trounson has not filled the VP slot despite a hiring effort that began nearly 18 months ago. That leadership situation may seem daunting to some board members.

However, the CIRM board may choose other avenues. One possibility would see the board deferring all action until the dust settles. That would mean Klein would continue in his post, unless he walks directly out the door, which he may do if he is not re-elected on his own terms. If Klein does that, as co-vice chairs, Torres and Duane Roth, could split the job's responsibilities until the board decides to vote.

In another scenario, the board could name an acting chair and schedule a later election for chair. If the directors are concerned that naming an acting chair might violate the technical terms of Prop. 71, they could officially designate the position as “interim presiding officer” or something similar. The board already created a “non-statutory” vice chair in giving the posts to Torres and Roth. To avoid giving the appearance of favoritism to Torres, the board could look to somebody like Gerald Levey, a former member of the board and former dean of the UCLA medical school, for the interim job. Other possibilities include board members Ed Penhoet, co-founder of Chiron, and Sherry Lansing, former Hollywood studio chief, both currently members of the board and well-regarded.

Given a little more time, the board could put together a group of board members to deal with selection of a new chair, which could make fresh recommendations for nominations to the four statewide officials entitled to make them. The CIRM board could even ask the public, researchers and industry via its Internet site to make suggestions for candidates, as did state Controller John Chiang, one of the nominating officials.

One matter for the board to consider is Klein's lame duck status -- even if he were re-elected for a 12-month term as he has suggested. He will increasingly lose effectiveness. Outside of CIRM, researchers and the biotech industry will be looking ahead to his replacement – something that is likely occur as well within the agency.

Klein, a real estate investment banker, says it is necessary to find a nationally respected scientist to replace him and has promised to do so. However, the board has made no public statement that it wants a scientist as chairman. Plus Klein's past searches for a president for CIRM have been rocky and prolonged. It took a year to bring Trounson on board, including a delay of three months after his hiring was approved. No reason exists to expect anything different should Klein embark on his own search for his successor.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., and longtime observer of CIRM, said the board should simply vote in Torres.

He made the suggestion when queried by the California Stem Cell Report. Simpson declared,

"Nobody disputes Bob Klein's substantial contributions to CIRM. The agency would not even exist if it were not for him. Nonetheless, there is a time for every leader to move on.

"That time is past due for Klein, a point that was hammered home by his sleazy and inappropriate backroom tactics to manipulate the selection of his successor."

"Suggestions to elect an interim chairman are intriguing, but unnecessary. Art Torres has been nominated for the post and has all the qualifications necessary to lead CIRM to the next level."

In whatever case, Prop. 71 makes it clear that the choice of chairman is a matter for the entire 29-member board. Klein is only one member of that board.

Klein's Maneuvers, CIRM's Reputation and Bernstein's

A Canadian scientist yesterday pretty much identified a bottom line on the attempt by CIRM Chairman Robert Klein to hand pick his successor at the $3 billion public research agency.

In an interview with the Toronto Globe and Mail, Alan Bernstein said the publicity about the machinations “compromises his international reputation and the reputation of the [California] agency.”

Bernstein knows because he was the man Klein tried to name as his successor. Bernstein, head of HIV Global Vaccine Enterprise of New York, referred to publicity in news articles here and elsewhere that reported a ruckus about closed-door meetings and possible conflicts of interest involving Klein's maneuvers.

Reporter Carolyn Abraham began her article by declaring the tale was a “strange story.” She added,

“In the small and highly specialized world of stem cell research, it is even stranger still.”

It was interesting enough to draw 278 comments from readers. (On Monday morning, the Globe listed the article as the most widely read science story on its site.)

The conflict allegations were first reported in the Los Angeles Times and referred to Bernstein's role as chairman of a blue-ribbon panel that reviewed CIRM's operations and found them “extraordinary.” The panel's report is scheduled to be discussed at Wednesday's CIRM board meeting.

In his first comments about the conflict matter, Bernstein told Abraham,

“There was no conflict of interest, the review was done before I was approached about this job.”

Abraham continued,

“He (Bernstein) said Mr. Klein contacted him only recently to ask if he would be interested.
“'I didn’t go after this job, I’m very happy where I am,' he said, 'pumped about the research in HIV prevention. …But what do they say – you can’t say no to The Terminator?'”

Terminator is a reference to California Gov. Arnold Schwarzenneger, one of four state officials who can nominate a person for CIRM chair. The full CIRM board elects a chair from those who are nominated, although the board could reject them all.

Abraham wrote,

“In an interview Friday, Dr. Bernstein said he had received a personal letter from Gov. Schwarzenegger last week saying he was pleased to nominate him for the top job. But this week, he said, the governor wrote again with regrets that he would have to withdraw his nomination because of his citizenship.”

The governor's nomination of Bernstein was never released by the governor's office or CIRM. However, the lieutenant governor did, in fact, nominate Bernstein in a letter dated Nov. 30, but withdrew it later.

Late Thursday following the media flap, Klein for the first time said that Bernstein could not serve because of his Canadian citizenship. In a news release, Klein said “a technical legal requirement” barred Bernstein as a nominee. (We should note that an Australian, Alan Trounson, is president of the stem cell agency.)

Early Friday morning, we asked Don Gibbons, communications chief for CIRM, to point us to the law that Klein mentioned. We asked again late Friday afternoon. Gibbons has not replied.

The Canadian issue rankled some top scientists in Canada. Abraham wrote,

“'CIRM should be picking the best candidate for the job, not basing it on citizenship,' said Mick Bhatia, scientific director of McMaster University’s Stem Cell and Cancer Research Institute. The number of stem cell researchers is relatively small, he said, and the number with international managerial experience even smaller. 

“'Then to have to fractionate that by the number of U.S. citizens – you’ve got to be down to a few zip codes,' said Dr. Bhatia, who turned down an offer to join the California institute a few years ago. 'For an initiative that has been so global in their outreach … actively recruiting scientists internationally … I’m sure this rule is hurting CIRM.' 

“David Colman, the American who has headed the famed Montreal Neurological Institute at McGill University for the past eight years, called the California law 'archaic and anachronistic.' 

“'In this day and age, it’s ridiculous,' he said. 'Today, you want to have international searches for everything. Alan is a smart, good scientist and a tested leader. He would have been great.'”

CIRM Director Prieto Comments on Transparency

A Web site devoted to “Californians' rights to find out what's going on” last week quoted a big chunk of a piece from the California Stem Cell Report.

The item on CalAware Today by Anne Lowe was headlined, “Transparency Lacking in State's Stem Cell Agency.” It cited the our item “Public and Industry Left in the Dark by California Stem Cell Agency.”

We also received a comment on the situation via email from Francisco Prieto, a CIRM board member and Sacramento physician.

Prieto said,

“I don't think the failure to produce documentation and information well in advance of meetings is in any way malicious or deceptive, but rather reflects the fact that we put what may be excessive demands on some of our limited staff at CIRM. This has been a concern of many board members as well - that we receive supporting materials with too little time to review them in depth before a meeting. Both our internal and external communications could be improved, but it isn't due to unwillingness to communicate or ill will. I'm hoping the liberalization of our staff limits under the Alquist bill will help, but we know that our communication with the public is an area we have to take a serious look at.”

Klein's Re-nomination Almost Unnoted in Major Media

The hooha about CIRM Chairman Robert Klein and his maladroit attempts to manipulate the election of his successor generated little attention today in the mainstream media, but left an Internet legacy that may haunt the agency for some time.

Only three newspapers carried a story as far as we can tell: the San Francisco Business Times, the Los Angeles Times and The Sacramento Bee. The most complete story, however, appeared on Nature magazine's web site, which has a much narrower but important reach

In the Nature piece, Elie Dolgin wrote that Klein said he would not insist on the full $529,000 salary the chair is entitled to, but continue with the $150,000 he is currently receiving for the 12 months that he said he will serve.

Klein, who is a real estate investment banker, also indicated that he will insist on a top level scientist or clinician-scientist as a replacement to succeed him. Klein did not note that such a scientist would also by law be required to have “direct knowledge and experience in bond financing,” probably an extremely rare quality among scientists with national reputations.

Klein has had repeated difficulties in the past in hiring a president for the agency. CIRM also has not been able to hire a vice president for research and development despite a search that began nearly 18 months ago.

Any candidates for chair may find the agency's track record on hiring and management less than attractive, especially given Klein's latest unsuccessful attempt to engineer selection of a successor. Some cynics might wonder, however, whether Klein knew all along that Bernstein's Canadian citizenship would ultimately disqualify him and force the board into a position that would make Klein's re-nomination an apparent necessity. Few people know the law concerning the stem cell agency as well as Klein, who has more than once said he wrote Prop. 71, the measure that created CIRM.

Dolgin also reported that Art Torres, who has also been nominated for CIRM Chair, “probably” will not challenge Klein but is interested in staying on in his current co-vice chair slot.

Today's four stories are only part of what will pop up in the future as potential hires and journalists examine CIRM's performance. The coverage earlier in the week of the closed-door meetings and allegations of conflicts of interests will surface as well. CIRM would do well to keep in mind the admonition -- "If it can't stand the light of day, don't do it."

Questions Raised About Klein Campaign to Pick His Own Successor

The closed-door machinations involving the election of a new chair of the California stem cell agency raise important policy questions about the conduct of the agency, its openness and whether the structure of the board and chairman is in the best public interest.

Last year, the Little Hoover Commission, the state's good government agency, documented many of those problems in its 88-page report on the $3 billion enterprise. Among other things, the commission recommended much earlier action to smooth out the election process and to create a seamless leadership transition.

Additional insight into some of the issues can be found in an exchange of emails today involving CIRM board members.

The following messages went to all members of the CIRM board as a result of an item yesterday on the California Stem Cell Report, in which we asked whether Klein's Portola Valley meeting Sunday was legal under the state's open meetings law.

The first message is from James Harrison, outside counsel to the board. The second is from Jeff Sheehy, a member of the board, who responded to Harrison's memo. Sheehy raises points that go beyond the legality of the meeting, addressing the integrity of the entire election process for chairman of the $3 billion agency. Here is Harrison's email.

"Dear Board Members,

"Bob asked me to provide you with information regarding a dinner he arranged for last Sunday evening in response to a blog post by David Jensen.

"Bob wanted to create a forum for potential nominees for Chair and Vice-Chair [Art Torres, Jeff Sheehy and Alan Bernstein] to meet and exchange views prior to the Board meeting. Because of the Bagley-Keene limitations, however, he limited the dinner to a small number of board members, including himself, Ted Love, who served as interim CSO, and Robert Birgeneau, who was a colleague of Dr. Bernstein at the University of Toronto. Melissa King and I also attended.

"The participants engaged in an open and constructive discussion, and the meeting was in compliance with Bagley-Keene.

"If you have any questions, please contact me.

"James"

Here is Sheehy's response:

"Hi James,

"From what I can gather, this was just one of several informal meetings or phone calls involving several board members through which the determination of the next chair was meant to occur.  There were further conversations with the constitutional officers who have the duty to nominate individuals for chair and vice-chair with the intent to have them agree to collectively nominate a single individual for chair.

"What process was used to screen potential candidates for chair?  Were Californians, women, and/or people of color considered?  Under what board process, committee or sub-committee was this activity undertaken?  What board members were involved and what were their roles?  Why were other board members excluded?  Why did this not take place in public under established board practices including recently adopted procedures for selecting the next chair and vice-chair?

"Why was the chair’s role and salary reconfigured for Bernstein in direct contradiction of adopted board resolutions stating that the chair is not the chief executive of the agency, the chair is a part-time position, and the salary is $150,000?   Items were placed and then removed from yesterday’s aborted Governance sub-committee meeting that would have restructured the adopted budget for the agency to accommodate the larger salary for Bernstein?  How was this decided?

"I look forward to your response.
"Thank you,
"Jeff Sheehy"

Klein Removes Ambiguity and Says He Will Seek 12-month Term

CIRM Chairman Robert Klein tonight issued an unequivocal statement that he would seek re-election to his post, declaring that he was needed to provide “continuity” to the $3 billion enterprise for the next 12 months.

Klein said he accepted the nomination and would “work with the (CIRM) board and the constitutional officers to identify candidates...to succeed me” within the next year.

Klein's statement also mentioned the withdrawal of Alan Bernstein, who Klein had touted in closed-door meetings as his preferred successor. Klein's statement said,

“Dr. Bernstein would have been an outstanding nominee for Chair of CIRM’s governing board, but due to a technical legal requirement regarding citizenship, he is not eligible to serve as a nominee.”

CIRM Election Wrap-up

Reporter Ron Leuty of the San Francisco Business Times has wrapped up the CIRM election events of the day in a piece that can be found here.

Klein's Careful Statement on Re-nomination

In a statement made in connection with his re-nomination as chairman of the California stem cell agency, Robert Klein said today he wanted “to continue to build” on the state's stem cell research record.

But did he say he would accept re-nomination?

CIRM's chief communications officer, Don Gibbons, pointed us to the statement when we asked whether Klein planned to accept re-nomination.

The press release from the governor's office said,

“I am honored to be nominated chair of CIRM’s governing board by Governor Schwarzenegger,” said Klein.  “California was the first state to support and fund stem cell research, and I want to continue to build on California’s global leadership including growing our national and international partnerships and forging new ones that will help carry on this important research.”

By our reading, the quotation from Klein does not say that he accepts the nomination or that he is looking forward to running the agency – only continuing to build in the area of stem cell research. That could mean a variety of things, including bird-dogging CIRM's proposed new multibillion bond issue on a volunteer basis. We may be parsing the statement too closely, but Klein, who is a lawyer, can be exquisitely careful with words.

Klein has been adamant as recently as October about not planning to head the agency for another term. Plus, he may not have votes on the board to win re-election following the Bernstein/Portola Valley plan ruckus.

Klein Re-Nominated for Chair of California Stem Cell Agency

Republican California Gov. Arnold Schwarzenegger today nominated Robert Klein for a second term as chairman of the California stem cell agency after Klein's attempt to hand pick his successor collapsed amid questions about the integrity of the process.

Reporter Ron Leuty of the San Francisco Business Times was the first to report Klein's re-nomination.

Also nominating Klein for another term was Republican Lt. Gov. Abel Maldonado, who acted after his first nomination, Alan Bernstein, withdrew. Bernstein was Klein's choice as successor. However, Klein's campaign on behalf of Bernstein failed following disclosure in the media of closed-door meetings and allegations of conflicts of interest.

Also nominated for the chairmanship is Art Torres, currently co-vice chair of the board. State Controller John Chiang proposed the election of Torres.

State Treasure Bill Lockyer today announced he would not make any nomination for chair of the $3 billion agency. But he re-nominated Torres for vice chair. Jeff Sheehy, a member of the board, has been nominated also for vice chair by Chiang.

Klein has been steadfast when questioned about his desire to give up the job at the end of his term this month. One might also question whether, after the ruckus about the Bernstein candidacy, there are sufficient votes on the board to re-elect him. We have queried CIRM about whether Klein will accept the re-nomination.

Bernstein Drops Out of Race for CIRM Chair

Efforts by CIRM Chairman Robert Klein to engineer the election of Alan Bernstein as his successor at the $3 billion California stem cell agency collapsed today when Bernstein withdrew from the race, the California Stem Cell Report has been told.

The move followed yesterday's disclosure (see here and here) of a closed-door meeting Sunday at a Portola Valley restaurant attended by only five of the 29 directors of the California Institute for Regenerative Medicine. Klein presented a plan at the meeting that would have made Bernstein an “executive chairman” of CIRM. Klein was also reportedly lobbying major state officials such as the governor to win backing for Bernstein. One of the board members attending the session, Jeff Sheehy, complained publicly about the meeting, describing it as a “horrible" way to pick a new chair.

Queried via email, Bernstein, head of HIV Global Vaccine Enterprise of New York, said,

"I am very busy at an HIV vaccine meeting and unable to offer a comment at this time."

Bernstein recently chaired the blue-ribbon panel that  recently conducted a sweeping review of CIRM's operations.

CIRM directors must pick their chair from candidates nominated by four of California's constitutional officers: the governor, lieutenant governor, treasurer and controller. Bernstein was nominated Tuesday by the lieutenant governor. Art Torres, co-vice chair of the CIRM governing board, was nominated yesterday by the controller. The state treasurer yesterday said he would not make a nomination because of the ruckus over Bernstein. The governor is yet to be heard from.

We will have more on this shortly.

Stem Cell Chairmanship Flap Draws Major Media Coverage

The ruckus over selection of a new chairman for the California stem cell agency this morning drew the rare attention of the Los Angeles Times, the state's largest circulation newspaper.

And it wasn't the kind of attention that CIRM is looking for.

Reporter Jack Dolan mentioned a “possible conflict of interest” involving Alan Bernstein, a candidate backed by outgoing chairman Robert Klein, and said Bernstein could become “one of the highest paid employees in state government.” The position of CIRM chairman carries a salary with a top range of $529,000.

Dolan reported that state Treasurer Bill Lockyer, a longtime colleague and friend of another candidate for chair, Art Torres, has decided not to nominate anyone because of misgivings about Bernstein.

Dolan quoted Tom Dresslar, Lockyer's spokesman, as saying,

"He just doesn't have enough information to alleviate his concern about Mr. Bernstein's role in crafting the (recent external review) report.”

Dolan's article raised the conflict question in connection with completion of the report, which Dolan described as “glowing.” Bernstein chaired the panel, which included seven other persons. Presumably the conflict would arise if some sort of quid pro quo existed for generating a favorable report.

Dolan quoted Klein, a strong supporter of Bernstein, as saying,

"It would be quite a compliment to the agency if someone who has done such a thorough review of the agency, and has talked to everyone involved, would accept the nomination to be chair."

Dolan did not include in his story Klein's Portola Valley plan to install Bernstein as an executive chair.

The board is expected to take up the chairmanship election later this month, although it doesn't have to vote on any of the candidates. It has a variety of options: One would be to pass on all the candidates, choose an interim chairman, let the dust settle and make a final choice in a month or two.

The Los Angeles Times has rarely reported about activities of the California stem cell agency over the last six years. Dolan recently wrote an overview assessment of the agency that has attracted national attention. His article has ricocheted around the Internet as fodder for critics of hESC research and persons concerned about what they perceive to be unnecessary government spending.

Closed-Door Portola Valley Plan to Install Bernstein as New Chair of CIRM

Engineered by outgoing Chairman Robert Klein, a closed-door plan is reportedly afoot to restructure the management of the $3 billion California stem cell agency to have it run directly by a new executive chairman, Alan Bernstein, now head of HIV Global Vaccine Enterprise of New York.

It is unclear how the current agency president, Alan Trounson, would fit into the proposed new arrangement. But one CIRM board member, Jeff Sheehy, said,

“The president obviously loses out.”

The plan was first reported today by Ron Leuty of the San Francisco Business Times. Leuty described the effort as “backroom politics.” He also characterized Bernstein as “unqualified” in an apparent reference to the legal requirement that the CIRM chairman be a “patient advocate.”

Leuty quoted Sheehy, a candidate for vice chair of the agency, as describing the dealings as a “horrible process” that was far from open.

Based on what Leuty wrote and what Sheehy and others told the California Stem Cell Report here is what has occurred.

On Sunday, a dinner meeting was held at a Portola Valley restaurant attended by Klein, Sheehy and CIRM board members Ted Love and Robert Birgeneau, the chancellor of UC Berkeley and who has rarely attended a CIRM board meeting. Birgeneau, however, is a former colleague and friend of Bernstein. Also in attendance were Art Torres, co-vice chairman of the board, and Bernstein, both of whom have been nominated for chairman, along with the board's outside counsel, James Harrison of Remcho, Johansen & Purcell
of San Leandro.

Sheehy said that a scenario was proposed at the meeting that would make Bernstein an “executive chairman” and effectively CEO of CIRM. To qualify Bernstein legally as a patient advocate, Klein would appoint Bernstein to the board of Klein's private stem cell lobbying group, Americans for Cures, which shares quarters in the building that houses the offices of Klein's Palo Alto real estate investment banking firm.

Sheehy told the California Stem Cell Report,

“Given that (CIRM board)members can't even put an item on the agenda without the chair's consent, and we can't remove the chair (no provisions for removal in Prop. 71), and that many members are from institutions that receive funds from CIRM, and that the legislature and constitutional officers have very little control over CIRM, Bernstein will become California's stem cell czar, effectively controlling $2 billion in state funds.”

Sheehy said the proposal also jeopardizes the integrity of the patient advocate positions on the 29-member board. He said,

“By making the patient advocate qualification--which is taken from the language for qualifications that all 10 ICOC patient advocates are appointed under--infinitely malleable, this move makes all patient advocates vulnerable to replacement by a scientist.”

We asked Harrison about the legality of the Sunday meeting, given the state's open meeting laws. He replied, “Because the meeting involved far fewer than a majority of the board, it was not subject to” the state's meeting laws.

We then asked Harrison about the possibility the session could turn into an illegal serial meeting if the participants talked with other board members. Harrison replied,

"We've advised the board members to refrain from discussing the nominations with other board members."

Information about the meeting has been communicated to at least one other board member, who warned us that we did not have all the information about the Portola Valley deal. But the person was unwilling to share anything further.

An agency spokesman told the San Francisco Business Times that he would have no comment.

Bernstein was nominated for chairman by Republican Lt. Gov. Abel Maldonado in a letter dated Nov. 30. We were told this afternoon that CIRM asked that the letter, which is a public record, be withheld until tomorrow. State Treasurer Bill Lockyer, a Democrat, is expected to announce his nominations tomorrow along with Gov. Arnold Schwarzenegger.

The board is expected to take up the nominations Dec. 15 at Stanford.

Here is Maldonado's nominating letter.
Lt. Gov.'s CIRM Chair Nomination Letter

CIRM Defends Its Information Practices

Earlier today, we told the California stem cell agency we would be glad to carry verbatim a response to our item – Public and Industry Left in Dark by California Stem Cell Agency. The agency and its directors have a standing invitation from the California Stem Cell Report to comment on this Web site and have their entire remarks carried without editing.

Here is what was filed by James Harrison, outside counsel to the CIRM board.

“CIRM takes its obligation to fully inform the public very seriously.  In fact, in most cases, there are multiple opportunities for the public to participate in the development of CIRM's policies.  Through the use of subcommittees, draft policies are normally made public well in advance of the full Board's consideration of those policies, and the public has an opportunity to comment on the policies at subcommittee meetings and at Board meetings before they are adopted. 
 
“When you criticize the agency for not posting materials ten days before a subcommittee meeting (which, as you know, is not required by law), you ignore the fact that the Board's subcommittees do not typically make final decisions; rather, they consider draft policies and make recommendations to the Board, which provides the public a second opportunity to comment.  The Finance Subcommittee Meeting is a good example.  The question of warrant coverage and a payback alternative have been raised at a prior public meeting and the Finance Subcommittee will not make any final decisions this week; rather, its recommendations will go to the full Board for consideration, providing another opportunity for public input. 
 
“In the case of the Governance Subcommittee, there are no written materials for two of the items because they are placeholders which will not be addressed at the meeting (because Bagley-Keene requires CIRM to post the agenda ten days in advance of a meeting, we sometimes include items before we know whether consideration of the items will be required in order to preserve the opportunity to consider them).  As to the one item which will be considered (the role of the former chair), the discussion is intended to be conceptual.  If the Subcommittee decides to move forward on this item, written materials will be prepared and distributed well in advance of the Board meeting at which it is considered.”